Conservative media are mocking President Obama for countering Mitt Romney's misleading claim that gasoline prices have doubled during his tenure by accurately noting that prices were unusually low in January 2009 "because the economy was on the verge of collapse." But experts including a former American Petroleum Institute economist agree that the economic crisis drove gas prices to artificial lows.
Conservative Media Mock Obama For Noting Gas Prices Experienced Temporary Collapse
Obama: Gas Prices Were Low In January 2009 "Because The Economy Was On The Verge Of Collapse." During the second presidential debate, President Obama explained that gas prices were low when he took office because of the economic recession:
OBAMA: Well, think about what the governor -- think about what the governor just said. He said when I took office, the price of gasoline was $1.80, $1.86. Why is that? Because the economy was on the verge of collapse, because we were about to go through the worst recession since the Great Depression, as a consequence of some of the same policies that Governor Romney's now promoting.
So, it's conceivable that Governor Romney could bring down gas prices because with his policies, we might be back in that same mess. [Transcript of 2nd presidential debate, via Politico, 10/16/12]
Fox's Varney On Obama's Explanation: "Not So." Fox Business anchor Stuart Varney said on America Live:
VARNEY: The president is suggesting that, 'oh maybe it's the lousy economy that produced low gas prices.' Not so. What we need to produce low prices again is more energy production. And that's not where the president is going. [Fox News, America Live, 10/17/12]
Sean Hannity Labels The Claim That Gas Prices Were Low Due To Economic Collapse "Obamanomics." Fox News anchor Sean Hannity tweeted during the debate:
Dana Loesch: Obama's Remark Was "Silly." CNN contributor Dana Loesch called Obama's explanation "silly":
Erick Erickson: "Undecided Voters Clearly Did Not Buy" Obama's "Delusion." CNN contributor Erick Erickson wrote at RedState.com:
The President tried to claim that the reason gas prices were so low in 2008 was because the economy was so bad. He actually wanted the audience to believe that the economy is going gangbusters now as a reason for $4.00 gasoline -- a delusion the undecided voters clearly did not buy. His words -- he said that gas prices were so low because of the economy, which clearly means he thinks it is so high now because of the recovery. What recovery? Romney hit him hard on this and the undecided voters reacted favorably to Romney. There is more room for Romney to hit Obama on the airwaves over gas prices. [RedState.com, 10/17/12]
But Experts Agree Collapse In Gas Prices Was Due To Recession
Gasoline Prices Plummeted In Late 2008 In The Midst Of A Massive Recession. The following chart shows that oil and gas prices fell sharply in late 2008 just before President Obama took office (displayed as an index to show the correlation between oil and gas prices):
[Federal Reserve Bank of St. Louis, accessed 10/17/12]
Former API Economist: A Recession Is "One Way To Reduce Oil Prices But Not A Very Attractive One." Michael Canes, former Chief Economist of the American Petroleum Institute, has noted that the drop in prices in 2008 was due to the economic recession:
Most oil market experts believe that the rapid and sustained reduction in oil prices that began in 2008 and extended beyond occurred because the world economy began to slow down and ultimately to experience a deep recession. This is one way to reduce oil prices, but not a very attractive one. [Media Matters, 3/8/11]
Wall Street Journal: "When Mr. Obama Was Inaugurated, Demand Was Weak Due To The Recession." In March 2012, then-presidential-candidate Newt Gingrich compared gas prices to those at the time of Obama's inauguration and claimed: "All of this gigantic increase came from his policies." The Wall Street Journal debunked the claim, pointing out that Gingrich "ignore[d] the basic fact about U.S. gas prices: They are largely fixed by the price of crude oil, which is determined by global supply and demand." The Journal went on to explain that "[w]hen Mr. Obama was inaugurated, demand was weak due to the recession. But now it's stronger, and thus the price is higher." [Wall Street Journal, 3/10/12]
Oil Consultant: Gas Prices Are Returning To Prior Levels After Economic Recession. The Los Angeles Times reported in March:
The demand for crude oil has risen as the recovery from the severe global recession has picked up steam in the U.S. and abroad. That, in turn, has helped fuel higher prices at the pump, economists and industry analysts said.
"A lot of what drives prices is projection of future demand," said Carl A. Larry, president of Oil Outlooks and Opinions, a research and consulting firm.
The rising prices are, in part, about getting back to a normal level as demand for gasoline and other petroleum products increases from the lows of the severe recession, researcher Larry said. [Los Angeles Times, 3/22/12]
Fox Business: Economic Recovery Will Cause Gas Prices To Head Towards Previous Highs. Citing GasBuddy.com's Patrick DeHaan, Fox Business reported that "consumers can expect higher gas prices this year" as a result of the economic recovery:
The economy is making gains on its path to a slow recovery, which means consumers can expect higher gas prices this year.
"When the economy improves, we will be using more petroleum," explains Patrick DeHaan, senior petroleum analyst at GasBuddy.com. "It's all but a certain that prices will likely go up this year." [Fox Business, 1/11/12]
Oil Expert: "The Oil Industry Has Been Able To Convince People There Is A Connection Between U.S. Drilling And Prices." From a January 2011 Greenwire article:
If gas prices keep increasing, Republicans probably will make a push on increased fossil fuel production, said Ken Green, resident scholar with the American Enterprise Institute think tank.
But experts disagreed about how much impact additional drilling could have. Crude oil is a global commodity, Green said.
"The world price is the world price," Green said. "Even if we were producing 100 percent of our oil," he said, if prices increase because of a shortage in China or India, "our price would go up to the same thing.
"We probably couldn't produce enough to affect the world price of oil," Green added. "People don't understand that."
U.S. production could be negated by decisions that the Organization of Petroleum Exporting Countries makes, said Philip Verleger Jr., energy economist, and David Mitchell EnCana, professor of management, at the University of Calgary's business school.
"Suppose the U.S. were to boost production 1 million barrels a day," Verleger said. "OPEC has the capacity to cut 1 million barrels."
The oil industry has been able to convince people there is a connection between U.S. drilling and prices, Verleger said. [Greenwire via NYTimes.com, 1/4/11]